ST. LOUIS, Feb. 21, 2025 (GLOBE NEWSWIRE) -- The Marketing Alliance, Inc. (OTC: MAAL) (“TMA” or the “Company”), announced its financial results today for its fiscal 2025 third quarter ended December 31, 2024.
Fiscal Q3 2025 Financial Key Items (all comparisons to the prior year period)
- Operating income from continuing operations of ($124,345) compared to $615,317 in the prior year period, the decrease is due in part to a Company-initiated change in recognition and timing of certain insurance distribution fee revenue (discussed below)
- Revenues were $4,586,204 compared to $4,738,004, the decrease was primarily due to timing of insurance fee revenue but was offset by an increase in construction revenue
- Net income was ($164,867) or ($0.02) per share compared to $692,159 or $.09 per share in the prior year period
- During the quarter, the Company repurchased 202,185 shares pursuant to its authorized share repurchase program to repurchase up to 800,000 shares of issued and outstanding common stock
Management Comments
Timothy M. Klusas, TMA’s Chief Executive Officer, commented, “This was a recalibration quarter for our Company, and while our team was not pleased to report negative financial results, we felt we made good progress this quarter that is not yet showing in our results. This was the first quarter with two recently filled key leadership roles and we introduced a new interactive website called TMA Social with integrated new tools and technologies on our insurance distribution platform for customers to save time, save expenses, and in turn drive better outcomes for their customers. The investments in the business we made, and continue to make, have been substantial.
While we had an adverse business mix (shift from higher margin carriers to lower margin carriers) in the insurance business in the quarter compared to the prior year quarter, of which we estimate at $175,000 of gross profit, we also had a few unique unfavorable comparisons versus the prior year quarter. The Company’s expense in the quarter for reimbursing agencies for their marketing and technology expenses was $165,000 more than last year because we accrued for it in the third quarter, instead of accruing all of it in the fiscal fourth quarter (like last year). Further, as our business continues to evolve, we have elected to acknowledge the changing nature of our reimbursement and marketing revenues by recognizing them over their respective projected project lives (often the calendar year) instead of when agreed and billed. Historically the company has treated non-refundable reimbursement and marketing fee revenue from carriers as earned when the agreed upon amount has been invoiced. During the prior year period the company invoiced approximately $370,000 during the fiscal third quarter. Going forward the company will treat reimbursement and marketing revenue as a time-duration item and allocate the revenue evenly throughout its respective period.
In the construction business we saw an uptick in revenues compared to the prior year quarter, however, we also saw a decrease in construction profit margin compared to the prior year quarter. The margin decrease was primarily due to unexpected project delays during the quarter due to weather. We continued to maintain a very disciplined approach to only undertaking jobs that were economically profitable with respect to our capabilities.”
On October 28, 2024, the Company announced its approval of a share repurchase authorization and its decision to discontinue the dividend. At the time, Timothy Klusas, the Company's President and Chief Executive Officer, stated, "The share repurchase authorization represents our financial strength and commitment to enhance shareholder value, and the Board’s willingness to change tactics to do so. The Board recognized, nor did it take lightly, that this action would be a significant change in our shareholder distribution strategy of paying dividends, which the Company has paid consistently since its founding in 1996. The Board arrived at this decision after monitoring the stock price while paying dividends and has concluded in its judgement that its dividend policy was not adequately reflected in the stock price." As of January 31, 2025, the Company has repurchased approximately 840,000 shares under this authorization since its announcement, consistent with the Board of Directors approval of the excess share amount necessary to complete a block purchase.
Fiscal Third Quarter 2025 Financial Review
- Revenues were $4,586,204 compared to $4,738,004, due to a decrease in the insurance distribution business that was not fully offset by an increase in the construction business.
- Net operating revenue (gross profit) for the quarter was $699,094, compared to net operating revenue of $1,295,497 in the prior year fiscal period.
- Operating expenses increased to $823,439 compared to $680,180 for the prior year.
- The Company reported operating income from continuing operations of ($124,345) compared to $615,317 in the prior year period, with differences due to factors discussed above.
- Operating EBITDA (excluding investment portfolio income) of ($58,379) was less than the prior year quarterly operating EBITDA of $694,540. A note reconciling operating EBITDA to operating income can be found at the end of this release.
- Investment gain (loss), net (from non-operating investment portfolio) for the quarter was ($48,095) as compared with $314,271 during the same period the previous year. The Company has reduced its holdings of equity securities by 35% at the end of the quarter versus the prior year.
- Net income (loss) was ($164,867), or ($0.02) per share, compared to $692,159 or $0.09 per share. Net income was impacted by the change in investment gain (loss), net, during the period.
- Common and outstanding shares decreased 202,185 during the quarter ending December 31, 2024, pursuant to the Company’s share repurchase plan.
Balance Sheet Information
- TMA’s balance sheet on December 31, 2024, reflected cash and cash equivalents of $1.9 Million; working capital of $5.7 million; and shareholders’ equity of $5.9 million; compared to cash and cash equivalents of $2.2 million, working capital of $6.7 million, and shareholders’ equity of $6.8 million as of December 31, 2023.
About The Marketing Alliance, Inc.
Headquartered in St. Louis, MO, TMA provides support to independent insurance brokerage agencies, with a goal of integrating insurance and “insuretech” engagement platforms to provide members value-added services on a more efficient basis than they can achieve individually.
Investor information can be accessed through the shareholder section of TMA’s website at:
http://www.themarketingalliance.com/shareholder-information.
TMA’s common stock is quoted on the OTC Markets (http://www.otcmarkets.com) under the symbol “MAAL”.
Forward Looking Statement
Investors are cautioned that forward-looking statements involve risks and uncertainties that may affect TMA's business and prospects. Examples of forward-looking statements include, among others, statements we make regarding our expectations of growth based upon our investments in our business, our expectations regarding our new website, our recently announced stock repurchase program, our plans to reduce expenses, and our ability to undertake more suitable jobs and generate earnings from our construction business. Any forward-looking statements contained in this press release represent our estimates, expectations or intentions only as of the date hereof, or as of such earlier dates as are indicated, and should not be relied upon as representing our views as of any subsequent date. These statements involve a number of risks and uncertainties, including, but not limited to, expectations of the economic environment, material adverse changes in economic conditions in the markets we serve and in the general economy; the ability of our construction business to be engaged for projects and for those projects to commence on the anticipated timetable and with the anticipated profitability; the ways that insurance carriers may react in their underwriting policies and procedures to the continuing risks they perceive from public health matters; our reliance on a limited number of insurance carriers and any potential termination of those relationships or failure to develop new relationships; privacy and cyber security matters and our ability to protect confidential information; future state and federal regulatory actions and conditions in the states in which we conduct our business; our ability to work with carriers on marketing, distribution and product development; pricing and other payment decisions and policies of the carriers in our insurance distribution business, changes in the public securities markets that affect the value of our investment portfolio; and weather and environmental conditions in the areas served by our construction business. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so.
| Contact: | ||
| The Marketing Alliance, Inc. | -OR- | The Equity Group Inc. |
| Timothy M. Klusas, President | Jeremy Hellman, Vice President | |
| (314) 275-8713 | (212) 836-9626 | |
| tklusas@themarketingalliance.com www.TheMarketingAlliance.com | jhellman@equityny.com | |
CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||
| Insurance commission and fee revenue | $ | 4,214,111 | $ | 4,423,349 | $ | 12,796,847 | $ | 12,238,184 | |||||||||||||
| Construction revenue | 276,843 | 136,655 | 966,565 | 1,261,596 | |||||||||||||||||
| Other insurance revenue | 95,250 | 178,000 | 137,285 | 239,800 | |||||||||||||||||
| Total revenues | 4,586,204 | 4,738,004 | 13,900,697 | 13,739,580 | |||||||||||||||||
| Insurance distributor related expenses: | |||||||||||||||||||||
| Distributor bonuses and commissions | 2,869,077 | 2,582,625 | 8,743,436 | 7,741,362 | |||||||||||||||||
| Business processing and distributor costs | 604,053 | 566,307 | 1,441,837 | 1,199,574 | |||||||||||||||||
| Depreciation | 934 | 3,631 | 5,768 | 9,382 | |||||||||||||||||
| 3,474,064 | 3,152,563 | 10,191,041 | 8,950,318 | ||||||||||||||||||
| Costs of construction: | |||||||||||||||||||||
| Direct and indirect costs of construction | 348,790 | 228,462 | 677,255 | 843,622 | |||||||||||||||||
| Depreciation | 64,257 | 61,482 | 189,446 | 179,976 | |||||||||||||||||
| 413,047 | 289,944 | 866,701 | 1,023,598 | ||||||||||||||||||
| Total costs of revenues | 3,887,110 | 3,442,507 | 11,057,741 | 9,973,916 | |||||||||||||||||
| Net operating revenue | 699,094 | 1,295,497 | 2,842,956 | 3,765,664 | |||||||||||||||||
| Total general and administrative expenses | 823,439 | 680,180 | 2,431,806 | 2,506,969 | |||||||||||||||||
| Operating income from continuing operations | (124,345 | ) | 615,317 | 411,150 | 1,258,695 | ||||||||||||||||
| Other income (expense): | |||||||||||||||||||||
| Investment gain, net | (48,095 | ) | 314,271 | (24,112 | ) | 337,220 | |||||||||||||||
| Interest expense | (28,827 | ) | (52,375 | ) | (103,485 | ) | (149,695 | ) | |||||||||||||
| Other income | - | 852 | 4,938 | 852 | |||||||||||||||||
| Income from continuing operations before provision for income taxes | (201,267 | ) | 878,065 | 288,491 | 1,447,072 | ||||||||||||||||
| Income tax expense | (36,400 | ) | 185,906 | 101,700 | 352,752 | ||||||||||||||||
| Net Income | $ | (164,867 | ) | $ | 692,159 | $ | 186,791 | $ | 1,094,320 | ||||||||||||
| Average Shares Outstanding | 8,008,081 | 8,081,266 | 8,008,081 | 8,081,266 | |||||||||||||||||
| Operating Income from continuing operations per Share | $ | (0.02 | ) | $ | 0.08 | $ | 0.05 | $ | 0.16 | ||||||||||||
| Net Income per Share | $ | (0.02 | ) | $ | 0.09 | $ | 0.02 | $ | 0.14 | ||||||||||||
CONSOLIDATED BALANCE SHEETS
| December 31, | December 31, | |||||||
| ASSETS | 2024 | 2023 | ||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 1,925,398 | $ | 2,171,210 | ||||
| Equity securities | 2,696,783 | 4,148,960 | ||||||
| Restricted cash | 1,623,127 | 624,525 | ||||||
| Accounts receivable | 6,125,827 | 6,549,034 | ||||||
| Current portion of notes receivable | 478,712 | 118,935 | ||||||
| Prepaid expenses and other current assets | 110,349 | 101,568 | ||||||
| Total current assets | 12,960,195 | 13,714,232 | ||||||
| PROPERTY AND EQUIPMENT, net | 691,722 | 885,907 | ||||||
| OTHER ASSETS | ||||||||
| Notes receivable, net due to the allowance | - | 561,941 | ||||||
| Restricted cash | - | 1,473,128 | ||||||
| Operating lease right-of-use assets | 173,571 | 215,092 | ||||||
| Total other assets | 173,571 | 2,250,161 | ||||||
| $ | 13,825,488 | $ | 16,850,300 | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued expenses | 4,626,314 | 4,894,136 | ||||||
| Dividends payable | - | 405,513 | ||||||
| Line of credit payable | - | 675,000 | ||||||
| Current portion of notes payable | 2,388,976 | 936,788 | ||||||
| Current portion of finance lease liability | 109,869 | 39,160 | ||||||
| Current portion of operating lease liability | 118,534 | 104,139 | ||||||
| Liabilities related to discontinued operations | 677 | 677 | ||||||
| Total current liabilities | 7,244,370 | 7,055,413 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Notes payable, net of current portion and debt issuance costs | 264,713 | 2,589,723 | ||||||
| Finance lease liability, net of current portion | - | 109,869 | ||||||
| Operating lease liability, net of current portion | 56,489 | 104,710 | ||||||
| Deferred taxes | 313,000 | 216,000 | ||||||
| Total long-term liabilities | 634,202 | 3,020,302 | ||||||
| Total liabilities | 7,878,572 | 10,075,715 | ||||||
| COMMITMENTS AND CONTINGENCIES (NOTE 13) | ||||||||
| SHAREHOLDERS' EQUITY | ||||||||
| Preferred stock, no par value, 10,000,000 shares authorized, | ||||||||
| no shares issued and outstanding | - | - | ||||||
| Common stock, no par value; 50,000,000 shares authorized, | ||||||||
| 8,081,266 shares issued and outstanding December 31, 2023 | ||||||||
| 8,008,081 shares issued and outstanding December 31, 2024 | 1,154,979 | 1,025,341 | ||||||
| Treasury Stock | (142,940 | ) | - | |||||
| Retained earnings | 4,934,877 | 5,749,244 | ||||||
| Total shareholders' equity | 5,946,916 | 6,774,585 | ||||||
| $ | 13,825,488 | $ | 16,850,300 | |||||
Note – Operating EBITDA (excluding investment portfolio income)
| Three Months Ended | Nine Months Ended | |||||||||||
| EBITDA Calculation | December 31, | December 31, | ||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Operating Income from Continuing Operations | $ | (124,345 | ) | $ | 615,317 | $ | 411,150 | $ | 1,258,695 | |||
| Add: | ||||||||||||
| Depreciation/Amortization Expense | $ | 65,966 | $ | 79,223 | $ | 207,474 | $ | 230,506 | ||||
| EBITDA (Excluding Investment Portfolio Income) | $ | (58,379 | ) | $ | 694,540 | $ | 618,624 | $ | 1,489,201 | |||
The Company elects not to include investment portfolio income because the Company believes it is non-operating in nature.
The Company uses Operating EBITDA as a measure of operating performance. However, Operating EBITDA is not a recognized measurement under U.S. generally accepted accounting principles, or GAAP, and when analyzing its operating performance, investors should use Operating EBITDA in addition to, and not as an alternative for, income as determined in accordance with GAAP. Because not all companies use identical calculations, its presentation of Operating EBITDA may not be comparable to similarly titled measures of other companies and is therefore limited as a comparative measure. Furthermore, as an analytical tool, Operating EBITDA has additional limitations, including that (a) it is not intended to be a measure of free cash flow, as it does not consider certain cash requirements such as tax payments; (b) it does not reflect changes in, or cash requirements for, its working capital needs; and (c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Operating EBITDA does not reflect any cash requirements for such replacements, or future requirements for capital expenditures or contractual commitments. To compensate for these limitations, the Company evaluates its profitability by considering the economic effect of the excluded expense items independently as well as in connection with its analysis of cash flows from operations and through the use of other financial measures.
The Company believes Operating EBITDA is useful to an investor in evaluating its operating performance because it is widely used to measure a company’s operating performance without regard to certain non-cash or unrealized expenses (such as depreciation and amortization) and expenses that are not reflective of its core operating results over time. The Company believes Operating EBITDA presents a meaningful measure of corporate performance exclusive of its capital structure, the method by which assets were acquired, and non-cash charges and provides additional useful information to measure performance on a consistent basis, particularly with respect to changes in performance from period to period.
